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JON COOK, REUTERS

May 30, 2012

, Last Updated: 5:11 PM ET

TORONTO - Toronto’s main stock index hit a one-week low on Wednesday as oil and gas and mining firms slumped on increased global growth fears, fuelled by the escalating euro zone debt crisis and signs from China that it is not planning a large economic stimulus.

Rising borrowing costs for Spain and Italy and the latest poll showing a lead for Greece’s left-leaning, anti-austerity parties ahead of next month’s elections added to concerns about the region’s economy being enveloped in the debt turmoil.

“There is this huge uncertainty sitting out there in front of the market,” said David Cockfield, managing director and portfolio manager at Northland Wealth Management. “As long as it doesn’t get mitigated some way or other, it’s just going to keep on scaring the daylights out of people.”

All of Canada’s 10 main sectors finished lower. The heavyweight energy sector slid almost 4% as U.S. crude fell nearly $3 and was on track for its biggest percentage monthly loss since December 2008.

Declines were led by major oil and gas producers. Canadian Natural Resources plunged 6.8% to $29.85, Suncor Energy slipped 3.6% at $28.15 and Cenovus Energy fell 3% at $32.10.

The base metals mining index fell more than 3%, as copper prices plumbed a 2012 low. Miners on the downside included Teck Resources, which slid 3.7% to $31.29, Potash Corp, down 0.8% at $40.63, and First Quantum Minerals, down 3.4% at $17.67. The Toronto Stock Exchange’s S&P/TSX composite index finished down 176.08 points, or 1.52%, at 11,433.22, its lowest close in a week. The index has slumped more than 7% so far in May.

Financial shares were also shaken by fears about Greece and Spain, falling 1.1%. Top insurer Manulife Financial led losses, down 4.5% to $10.90. Toronto-Dominion Bank shed 1.2% at $77.99, while Royal Bank of Canada dropped 0.7% to $50.64. Weak housing data from the United States also compounded the gloomy global growth picture as U.S. pending home sales unexpectedly fell in April to a four-month low.

Declines were stemmed after the European Commission threw Spain two potential lifelines on Wednesday, offering more time to reduce its budget deficit and direct aid from a euro-zone rescue fund to recapitalize distressed banks.

A mid-session recovery by gold miners helped pare some losses. Barrick Gold climbed 1.3% to $40.24 and Goldcorp Inc was up 2% at $37.89.

“If people are worried about preserving value, surely gold should be some place you go rather than sell,” said Cockfield.

Hopes that China would act to counter slowing growth were dimmed after influential academics said Beijing should shun aggressive fiscal stimulus, in remarks published in leading state-backed newspapers on Wednesday.

Those views joined a chorus of commentary countering market expectations that China might unveil a stimulus package similar to the 4 trillion yuan ($648.3 billion) in spending unleashed during the global financial crisis.

Also weighing on sentiment was Research In Motion, whose shares plunged more than 7% near an eight-year low at $10.66 on Wednesday, a day after the once iconic BlackBerry maker warned it would likely report a shocking first-quarter operating loss.

Canadian Pacific Railway Ltd shares slipped 2.2% to $75.08 on Wednesday after news that a strike at Canada’s second biggest railway would not end until Friday at the earliest. Not all sentiment was dour, however, as some saw an opportunity to invest in downtrodden Canadian stocks, most notably in the energy and mining sectors.

“Their valuations are getting close to 2008 levels,” said Michael Greenberg, portfolio manager at Franklin Templeton Investments. “Clearly, some of those sectors are pricing in some pretty bad news so for us that’s an opportunity to start adding.”